Market Report: a month since the rate rise
In the wake of the Federal Election and interest rate rises, May was always going to be a month worth watching.
For 13 weeks in a row, the auction clearance rate reduced across Sydney – the first time we’ve seen such a long decline since 2002.
It took multiple factors to influence the dynamic, with 4 main drivers playing their part: geo-political conflict, inflation, the election build up, and interest rates.
With one of those factors removed now that a new Federal Government is in place, the market has been moving more freely again. But we’re not predicting smooth sailing.
Buyers are now looking at each home with a magnifying glass, looking for key fundamentals and standout features. According to Domain figures for example, 2-bedroom houses lost momentum recently, while larger houses and even larger apartments fared better.
With 84 properties sold for the month, the vast majority were between $2 million and $11 million.
See the results: $2m to $11m.
The month offered up plenty of auction successes, with the last weekend in May being particularly strong for selling under the hammer.
Auctions to note:
5/65 Erskineville Road, Erskineville drew 15 bidders to the auction, selling above reserve for $1.955 million.
10 Dening Street, Drummoyne was another highlight, with 16 bidders pushing it to a sale price of $2.8 million.
36 Hutchinson Street, St Peters attracted 9 bidders, selling for $2.55 million.
Auctions were also active at higher price points, with 35 Toxteth Road, Glebe selling in front of 4 bidders for $5.7 million.
99 Denison Road, Lewisham sold with 3 bidders for $3 million.
21 Perry Street, Lilyfield sold with 3 bidders for $2.971 million.
153 Pitt Street, Redfern sold with 3 bidders for $2.485 million.
11 Young Street, Redfern sold with 3 bidders for $2.882 million.
Off market and more:
Behind the scenes, a number of homes transacted before going to market, or between BresicWhitney clients.
115 Victoria Street, Lewisham sold the day after the photoshoot for $2.6 million.
59 Cambridge Street, Paddington was on the market for 2 weeks with more than 100 people inspecting, selling for around $6.5 million.
204 Glenmore Road, Paddington sold for around $5 million with 95 groups inspecting.
The upcoming driver to watch will be the next interest rate hike, which buyers and sellers seemed to have have already factored into their property journey this month.
“When the market is going strong with tail winds pushing it along, everyone wants to get involved and they discount the things that make properties less desirable,” BresicWhitney CEO Thomas McGlynn says. “That’s when everything has momentum.
“It was only a matter of time before Sydney slowed down and if we take into account the gains of the recent years, homeowners still appear to be in a good place.
“The biggest change I’ve seen so far is that people are much more aware of the attributes they want, and are willing to hold out to find those properties. We expect these new selective search patterns to define the rest of 2022.”
Another pattern of note was seeing investors re-enter the market as our vacancy rates for rental properties hit their lowest levels since 2016, now tracking at 1% or below.
Those investors had also factored rate rises into their search, while buying with the knowledge that Sydney home prices have stalled and adjusted in the past, particularly at the end of each boom.
During the GFC in 2008, the average interest rates on Australian mortgages topped out at 8.62% or more than double where we are now. Today’s buyers and sellers have also heard a lot about how home loan rates hit a record high of 17% in the 1980s recession.
Homemakers and investors still bought with confidence this month, secure in the fact that mortgage rates were still low in 3% range, after dipping below 2% during the pandemic.
At the same time, available property has been tightening, with new listings down 17% in NSW this past month, and new stock down substantially at BresicWhitney.
As an independently-owned property group with agents that work together across 4 strategic locations, such market conditions have been easier to navigate because of our reach and the makeup of our network.
“I think the coming months will be harder for small teams and franchised offices to bring their sellers top results in the same small marketplace,” Thomas said.